The New Taiwan dollar completed its worst weekly decline since January 1998 on concern that slowing global growth will damp demand for emerging-market assets and hurt Taiwanese exports.
Asian currencies had their biggest weekly drop since 1998 as concern that the global economy is headed for a recession dimmed the outlook for exports and prompted investors to favor safer bets than emerging-market assets.
Asian policy makers may step up sales of US dollars to arrest slides in their currencies, Barclays Capital Singapore-based economist Wai Ho Leong said this week. The Bloomberg-JPMorgan Asian Dollar Index has slumped 3.6 percent this month.
“Concern about slowing global growth is intensifying and investors are increasingly becoming risk averse,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp in Bangkok.
“This is hurting the export outlook for the region, weighing on regional currencies. Some of the central banks may be in the market, but downward pressure remains quite strong,” he said.
The Taiwan dollar slid 2.6 percent this week to NT$30.388 against its US counterpart as of the 4pm local time close on Friday, according to Taipei Forex Inc. The currency dropped 0.1 percent on Friday, after declining as much as 1 percent earlier, on speculation that the central bank intervened.
South Korea’s won and India’s rupee rose on Friday after policy makers in the two nations said they were prepared to intervene, while US dollar sales by Bank Indonesia helped strengthen the rupiah.
All 10 most-traded Asian currencies weakened this week as the US Federal Reserve warned of “significant downside risks” to the US economy and a Chinese purchasing managers’ index showed that export orders and production declined.
The Bloomberg-JPMorgan Asia Dollar Index fell 2.6 percent in the week to 114.58 on Friday, the biggest drop since January 1998, according to data compiled by Bloomberg. The won lost 4.7 percent to 1,167.31 won per US dollar and the rupee retreated 4.6 percent to 49.4338. Malaysia’s ringgit depreciated 3.3 percent to 3.1848 and the rupiah weakened 2.6 percent to 9,033, Bloomberg data show.
The Philippine peso weakened 0.7 percent to 43.585 to the US dollar, the Thai baht declined 1.7 percent to 30.90 and China’s yuan fell 0.08 percent to 6.3885.
Global funds sold US$1.4 billion more Indonesian, South Korean and Taiwanese equities than they bought this week through Thursday, according to exchange data.
The IMF lowered its forecast for this year’s global economic growth this week to 4 percent from 4.3 percent, and for next year to 4 percent from 4.5 percent, predicting a “severe” fallout if Europe fails to contain its debt crisis.
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